A volatile oilseeds market is beset by uncertainties ranging from South American weather to European biofuels policy. With supply in coming months looking generous, buyers are sticking to satisfying their near term needs.
“Crushers are only buying hand to mouth because of the risk of the cheap Aussie crop which is rumoured to be coming into Europe at about a €6/tonne discount to the French,” Stuart Attridge, trader at Harlow Agricultural Merchants, told Agritrade News. “You have got enough rapeseed in the whole of Europe to certainly keep the market very happy.”
“There are more sellers for March, April, May and June then there are buyers in February,” he continued. “Buyers will move if they can make a margin on the spot stuff. But they won’t go further forward because they think there’s too much out there and the price might collapse.”
That could change if there are weather issues in South America and, especially in Argentina, develop into a major problem. “There is always weather on the backburner at this stage of the season,” Mr Attridge noted.
In its Market Report on Friday, AHDB Cereals & Oilseeds explained that weather had been the focus of the market last week, “with improved conditions in Brazil and forecast rainfall in Argentina weighing on soyabean markets. Recent weather in Brazil had provided mixed messages. “The early harvest of soyabeans has benefited from the dry weather in recent weeks, with the recent rainfall likely to slow harvest progress going forward,” AHDB said. “However, this is possibly over shadowed by the benefits that the increased soil moisture will have for the main soyabean crop.”
In Argentina, rains had eased some concerns over the effect of drought. “However, it remains to be seen if the precipitation will be enough to fully address soil moisture issues,” AHDB said.
Mr Attridge described the market as “highly volatile.” “Values this week have matched recent market highs in the low £290s,” he explained. “We saw them as low as £280/t last week.”
Uncertainties over the future of biodiesel add to the confusion. “The danger is, going forward, that with all these new EU rules and regulations on the biofuels and duties and all the restrictions on palm oil, they don’t look as if they’re going to expand the renewable fuels directive beyond 10%,” he pointed out. “Certainly the main crushers in mainland Europe, in France and Germany, that rely on the biofuel market might find it not so lucrative in the future. Does it make rape a viable crop, that is the worry?”
Continental crushers were highly dependent on the biodiesel market. “The worry for a lot of the crushers, certainly for the European guys is 60 or 70% of German oilseeds end up in that fuel type option,” he said. “You take that out of the equation, there is not enough demand just from the vegetable oil market for food consumption to absorb all this stuff.”